Port Talbot steel union suspends strike; French share prices jump after elections – business live | Business
Port Talbot steelworks union suspends strike threat
A union representing some workers at Tata Steel’s works in Port Talbot, south Wales, has suspended strikes after talks with the company.
Unite union is understood to have suspended the strike threat after high-level talks between union officials and the company.
Tata plans to close two blast furnaces at the site and shift towards much cleaner electric arc furnaces. However, unions want them to delay the closure – the first of which is due this week – to await a Labour government.
Labour has said it will offer significant extra state subsidy to the steel industry, above the £500m deal agreed with Tata Steel by the Conservative government.
A full statement from Unite is expected shortly.
Key events
Northern Irish politicians have raised concerns over the future of as many as 1,400 workers at the Spirit Aerosystems factory in Belfast, after its takeover by planemaker Airbus.
Boeing has announced the takeover of Spirit Aerosystems as it tries to retake control of its supply chain following a series of production issues. As part of that deal Airbus will take over Spirit operations serving it, including in Belfast which makes wings and fuselages for the small A220 jet.
However, the Unite union has said that 40% of the 3,600 workforce is employed on parts that are not related to Airbus projects, including work for Bombardier and Rolls-Royce. Airbus did not say whether it plans to continue that work.
Local politicians are concerned that job losses may result at an historic factory that traces its history back to Short Brothers, the first company to make production aircraft. First minister Michelle O’Neill and deputy first minister Emma Little-Pengelly released statements in which they said the government was working with the company to preserve the Belfast operations.
Economy minister Conor Murphy said:
“I have been engaging with the company and union on the acquisition and will work with all key stakeholders to ensure that the future status of the highly skilled workforce is protected.”
Reuters reported:
The leader of Northern Ireland’s largest unionist party, the Democratic Unionist Party’s (DUP) Gavin Robinson, said the sale represented only “a partial solution”.
Steve Aiken, a member of the smaller Ulster Unionist Party, said it was an outcome “neither management, workforce or the unions desired”, calling on Northern Ireland’s economy minister to intervene to ensure the entire business is retained.
“The minister also needs to emphasis to Airbus the considerable investment the Northern Irish and UK governments have made in wing and aerostructure manufacturing in Belfast and that we will not be allowing our aircraft industry to be asset stripped and manufacturing moved elsewhere,” Aiken added.
German inflation drops as European Central Bank mulls further rate cuts
German inflation has dropped slightly more than expected to 2.2% year-on-year in June, as the European Central Bank (ECB) considers whether to cut interest rates again.
It dropped from 2.4% in May, and was slightly lower than the 2.3% forecast.
The ECB has a 2% inflation target, but it has cut borrowing costs because it believes that inflationary pressure is easing. A further reduction in inflation could support that view.
Carsten Brzeski, global head of macro at ING, a Dutch investment bank, said the reading keeps the door open to further ECB rate cuts, but added that inflation “remains sticky above 2%. He wrote:
Looking ahead, the stickiness of inflation at slightly too high a level looks set to continue as favourable energy base effects are petering out while, at the same time, wages are increasing. With recent new wage demands, it is hard to see German wage growth coming down in the second half of the year.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, a consultancy, a September cut is likely. He said: said:
Looking further ahead for Germany, we see scope for a further decline in headline inflation to below 2% by August, helping to get a 25 basis point rate cut over the line in September, before a rebound to just under 2.5% by the end of the year.
Facebook owner Meta’s ‘pay or consent’ model breaches EU law
Mark Zuckerberg’s Meta has breached the EU’s new digital laws with an advertising model that charges users for ad-free versions of Facebook and Instagram, according to the European Commission.
Meta launched a “pay or consent” model last year in an effort to comply with the bloc’s data privacy rules, where users pay a monthly fee for an ad-free version of Facebook or Instagram that does not use their personal data for advertising purposes, writes the Guardian’s Dan Milmo. Users who do not pay have, as part of the signing up process for the platforms, consented to their data being used to tailor personalised adverts that appear in their social media feeds.
The European Commission, the EU’s executive body, said the model does not comply with the Digital Markets Act, which is designed to rein in big tech companies. The commission issued preliminary findings from an investigation into “pay or consent” on Monday and found the model “forces users to consent” to their data being collected from multiple platforms. It also does not allow users to choose a service that uses less of their data but is broadly similar to the “with adverts” versions of Facebook and Instagram, the commission said.
You can read the full story here:
Unite the union has said that Tata Steel will enter talks about “future investment for its operations and not just redundancies”, after suspending strikes.
Other unions have complained that there has been no progress in the last six weeks, but Unite suggested that Tata had changed stance.
Tata has stuck to its position that the two blast furnaces must close this year. However, a plan backed by counterpart unions Community and GMB suggested keeping one furnace open for longer while readying a large investment in greener technology (such as a direct reduced iron plant) to convert iron ore to iron, which could then be fed into an electric arc furnace.
That plan would preserve jobs on the blast furnaces for several years, and would then require more workers to run in the longer term – although nowhere near the 2,800 employees who could be out of work by the autumn.
Sharon Graham, Unite’s general secretary, said:
This is a significant development in the battle to protect jobs and the long-term future of steel making in South Wales. Investment from Labour secured by Unite will be key to the future of the site.
This breakthrough would not have come about without the courage of our members at Port Talbot who were prepared to stand up and fight for their jobs. Workers were simply not prepared to stand idly by while steel making ended and their communities were laid to waste.
It is essential that these talks progress swiftly and in good faith with the focus on fresh investment and ensuring the long-term continuation of steel making in South Wales.
Tata Steel had written to the three main unions representing steelworkers at Port Talbot offering more talks over its plans to cut 2,800 jobs as it closes the blast furnaces if the strike threat were removed.
The unions are hopeful that a Labour government would persuade Tata Steel to delay the closure of at least one blast furnace, preserving thousands of jobs for several years.
Unite had threatened strike action from 8 July – after the planned closure of the first blast furnace. The other unions were hanging on for a Labour government after 4 July. Shadow business secretary Jonathan Reynolds has already been in talks with the unions and the company in an effort to avert the closures.
Alun Davies, national officer for Community, which represents most of the affected steelworkers, said:
With thousands of jobs at stake, we welcome Unite’s decision to withdraw their strike action and get back around the table with their sister steel unions.
Tata confirmed that if the strike was called off they are ready to resume discussions on a potential [memorandum of understanding], through the multi-union steel committee which is chaired by Community.
The truth is Tata never walked away from those discussions, and at our last meeting on 22 May all unions agreed to conclude the negotiations and put the outcome to our members. Community will welcome resuming those discussions, but we regret that zero progress has been made since 22 May.
Port Talbot steelworks union suspends strike threat
A union representing some workers at Tata Steel’s works in Port Talbot, south Wales, has suspended strikes after talks with the company.
Unite union is understood to have suspended the strike threat after high-level talks between union officials and the company.
Tata plans to close two blast furnaces at the site and shift towards much cleaner electric arc furnaces. However, unions want them to delay the closure – the first of which is due this week – to await a Labour government.
Labour has said it will offer significant extra state subsidy to the steel industry, above the £500m deal agreed with Tata Steel by the Conservative government.
A full statement from Unite is expected shortly.
There has been a rush of manufacturing data today. The UK’s purchasing managers’ index (PMI) from S&P Global suggests it is doing better than Europe.
The PMI reading came in at 50.9 in June, still well into expansionary territory, in contrast to the two-year contraction in Europe. The reading was worse than the initial flash estimate of 51.4, and down slightly from May’s 22-month high of 51.2.
Rob Dobson, director at S&P Global Market Intelligence, said:
The UK manufacturing sector is enjoying its strongest spell of growth for over two years, with June seeing output and new order growth sustained at robust rates similar to May’s recent highs. The performance of the domestic market remains a real positive, providing a ripe source of new contract wins. In contrast, the ongoing weak export performance is concerning, with manufacturers reporting difficulties in securing new business in several key markets including the US, China and mainland Europe.
However, that did not stop companies from making job and spending cuts and trying to run down inventories of unsold products, Dobson said. Inflation may be partly behind that:
This is coming from a backdrop of renewed cost inflation pressure, with manufacturers’ input prices now rising at the quickest pace since the start of 2023. This renewed upward lurch in manufacturing prices will likely add to concerns over the potential stubbornness of underlying inflationary pressures among hawkish rate setters at the Bank of England.
It’s a big news day for what remains of Northern Irish manufacturing: first, we had the news that Airbus will take over the historic Shorts aerospace operation from Spirit Aerosystems. And now there are renewed questions over the future of the nearby Harland & Wolff site, after its shares were suspended on the London’s junior stock market.
It has been forced to temporarily suspend trading in its shares after accounting issues meant it was unable to file audited accounts on time, the Guardian’s Jack Simpson reports.
It expects to publish the accounts in the week commencing 8 July, with share trading resuming at that point.
The Belfast-based shipbuilder was plunged into uncertainty last month when it was reported that the UK government was witholding the approval of a £200m loan guarantee promised in December to shore up its finances.
You can read the full report here:
France’s Cac 40 up 1.5%; euro gains 0.5% against US dollar
France’s Cac 40 index has moderated somewhat: the index is now up by 1.5%.
That is still a notable move, but less than the nearly 3% surge earlier.
The euro is up by 0.5% today against the US dollar at $1.0766. A hung parliament would make it more difficult for either the far-right National Rally (RN) or the leftwing New Popular Front coalition to win a majority and increase spending. Some economists fear that a spending spree could prompt investors to dump French assets.
The chart below is what the pre-election move looked like in the bond markets. The yield on French bonds (which moves inversely to prices) had risen to a seven-month high before the election.
The gap between the yield on French and German debt had also soared, although it closed after the slightly lower than expected vote share for the RN over the weekend. Via Reuters:
The spread between French and German 10-year sovereign bond yields a gauge for the risk premium investors demand to hold French bonds – tightened to 73 basis points (bps), after hitting 85.2 on Friday, its highest level since July 2012. It was less than 50 bps the days before Macron called for snap elections.
However, even if the spread narrowed, the yield on French 10-year debt still rose to its highest since November. The yield hit a high of 3.334% on Monday, up from 3.135 before French President Emmanuel Macron called the election on 9 June.
On the French election, Swiss investment bank UBS said there is uncertainty over what will happen in the second round because of 250+ “triangular votes”, with second rounds contested by three candidates.
But the UBS analysts, led by Claudia Panseri, chief investment officer at UBS Wealth Management France, say that “the probability that no majority emerges from the election appears significant”. (And on that basis they tell investors to avoid overreaction in the coming days.)
The reach of the French far right will depend in part on whether other parties work together to stop them, UBS said:
By 6pm on 2 July, the candidates will need to confirm if they want to enter the second round or withdraw and lend their support to another candidate. It will also be important to see whether the various parties will give explicit guidance to their voters on which candidate to vote for in the second round in constituencies where their own candidate fared less well. Gabriel Attal, France’s prime minister, has called on members of his party who came in third to withdraw in favor of a “candidate who defends the values of the Republic”. For now, the left is calling on its third-placed candidates to withdraw in order to defeat the RN.
But either way, a “period of political instability” is very likely, they write in a note to clients.
France’s main stock index may have gained this morning, but UBS is cautious about the implications for company share prices, because uncertainty will be the name of the game for at least a week, and possibly longer. They wrote:
The poor showing by Macron’s Ensemble alliance in the first round is likely to mean that French and Eurozone equities struggle to recover some of their recent losses. […]
Fiscal worries will also likely remain until there is greater clarity after round two, preventing a larger rebound in stocks vulnerable to fiscal worries, such as financials and defense stocks. We expect European markets to stay volatile given there is still elevated uncertainty heading into the second round.
